R Sridhar steps down as CEO of Shriram Capital

Does it come as surprise that R Sridhar, who shifted to Chennai earlier this year to take charge as Managing Director and CEO of Shriram Capital Ltd, the holding company of the Shriram Group, is quitting his full time executive role in the company?

A chela of Founder-Chairman R Thyagarajan (RT), Chartered Accountant Sridhar joined Shriram Transport Finance Company 28 years ago. Shifting to Mumbai he took charge as the Managing Director and CEO in 2000. Sridhar quickly grasped the intricacies of financial engineering for which Mumbai is so much renowned. STFC’s capital base and assets funded grew exponentially over the last decade. At every stage STFC rode on innovation. Banks, though flush with funds, were not comfortable to finance directly used vehicles. STFC suggested securitisation taking care of risk assessment and contact with the prospective customers. Large financial institutions including CitiCorp and several European and American private equity funds flocked to STFC, which grew by leaps and bounds. Sridhar helped fine tune the systems and built the infrastructure, constantly pushing the boundaries. Shriram Automall Ltd and Shriram Equipment Finance Ltd were founded as subsidiaries.

The activities expanded manifold. By the end of March 2013, assets under management crossed Rs 50,000 crore and net profit earned during the year was Rs 1463 crore. Securitisation for the year crossed Rs 8500 crore. Market cap grew

over the past ten years from Rs 20 crore to

Rs 15,770 crore.

Cash management was perfected to an art by timely actions to raise funds over the medium term and lending over the short term. Sridhar helped change the earlier practice of keeping liabilities at 50 per cent each at floating rates of interest and fixed rates to 80 per cent on fixed loans and 20 per cent of floating loans. This was a big help in insulating the company from the frequent increase in interest rate resorted to by RBI over the last two years.

STFC institutionalised a secondary market through the auto malls providing an exchange for buyers and sellers. STFC kept NPAs to less than two per cent and the interest spread handsome around seven per cent. It lends for around six lakh vehicles in a year.

Sridhar shares several of the traits of RT, including interest in music. RT is all praise for the immense contribution of Sridhar in making STFC achieve a leadership position among NBFCs.

Understandably, the hectic schedule at Mumbai, managing hands-on operational pressures, is in contrast to a staid state of little action for Sridhar at Chennai. The vibrant financial market, the opportunity to interact with dozens of leaders and experts in finance characteristic of the commercial capital of India, are lacking in Chennai. Understandably, after his hectic stint at Mumbai, Sridhar should have found the going staid and dull.

His expertise in fund raising would continue to be tapped by Shriram Group. Sridhar may feel more comfortable shifting to Mumbai taking up more challenging tasks.

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